The Impact of Internal Markets on Health Care Efficiency: Evidence from Health Care Reforms in Sweden

Ulf-G. Gerdtham, Clas Rehnberg () and Magnus Tambour ()
Additional contact information
Clas Rehnberg: Centre for Health Economics, Postal: Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
Magnus Tambour: Centre for Health Economics, Postal: Stockholm School of Economics, Box 6501, 113 83 Stockholm, Sweden

No 170, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: A purchaser/provider split together with output- based reimbursement were recently introduced by several Swedish county councils. These changes have been motivated by arguments of efficiency and consumer choice. This paper tests the null hypothesis that hospital services are provided as efficiently by county councils with internal markets as by county councils with budget reimbursement. We first estimate technical efficiency using data envelopment analysis and then we regress the efficiency scores as the dependent variable on new internal organisations in a multiple regression by use of pooled cross-section data for the 26 county councils for two years (1993 and 1994). The results reject our null hypothesis and we conclude that the organizational changes in the county councils improve health care efficiency. Our results further indicate that the potential savings in costs due to a hypothetical switch from a budget based allocation to a performance based allocation is about 13%. We also found some evidence indicating that county councils with a non-socialist political majority are relatively more efficient than those with a socialist regime and that large county councils are more efficient than small county councils.

Keywords: Internal markets; productivity; regression; analysis; pooled data (search for similar items in EconPapers)
JEL-codes: D23 D24 I11 (search for similar items in EconPapers)
Pages: 33 pages
Date: 1997-04
New Economics Papers: this item is included in nep-cdm, nep-eff, nep-hea and nep-pub
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Published in Applied Economics, 1999, pages 935-945.

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Related works:
Journal Article: The impact of internal markets on health care efficiency: evidence from health care reforms in Sweden (1999)
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